US embassy cable - 05HANOI584

UNCLAS SECTION 01 OF 03 HANOI 000584 
 
SIPDIS 
 
SENSITIVE 
 
STATE PLEASE PASS TO USTR EBRYAN, GHICKS 
STATE ALSO FOR E, EB AND EAP/BCLTV 
STATE PASS USAID FOR CHAPLIN/ANE 
USDOC FOR 4430/MAC/ASIA/OPB/VLC/HPPHO 
GENEVA FOR USTR 
 
E.O. 12958: N/A 
TAGS: ETRD, ECON, VM, WTO, BTA 
SUBJECT: Vietnam: Ambassador and Vice Minister of Trade 
Discuss WTO Accession 
 
 
1. This cable contains sensitive information.  Do not post 
on the internet. 
 
2. (SBU) Summary:  The Ambassador met with Vice Minister of 
Trade Luong Van Tu on March 9 to discuss preparations for 
the bilateral market access negotiations on Vietnam's WTO 
accession next week in Washington.  Expressing appreciation 
for U.S. support in the accession process, Tu appealed for 
the United States to show flexibility in the negotiations 
and to set Vietnam as a priority in the coming weeks with a 
view to closing out the bilaterals by June.  The Ambassador 
replied that the United States would need to see significant 
GVN movement on both goods and services at the bilaterals 
next week to advance the process.  He also urged the Vice 
Minister to push forward on legislative actions required 
before accession.  Tu stated that the GVN was not wavering 
in its target for December 2005 accession and that misquotes 
attributed to Trade Minister Truong Dinh Tuyen to the 
contrary were being corrected.  The Ambassador also reminded 
Tu of the need to prepare for a vote on Permanent Normal 
Trade Relations (PNTR) by the U.S. Congress by ensuring good 
implementation of the Bilateral Trade Agreement (BTA) and 
dealing with outstanding issues involving U.S. firms.  End 
Summary. 
 
3. (SBU) In response to the Vice Minister's request, the 
Ambassador accompanied by ECON/C met with Vice Minister of 
Trade Luong Van Tu on March 9.  Remarking that the United 
States and Vietnam would hold bilateral WTO market access 
talks in Washington March 14-16, VM Tu said that he hoped 
the Ambassador and USTR would support Vietnam and seek to 
speed up these negotiations.  Noting that Multilateral Trade 
Director General Tran Quoc Khanh would head up the 
Vietnamese side, Tu solicited the Ambassador's view on how 
and when the two sides could conclude their negotiations. 
Tu commented that the WTO negotiations had two aspects, a 
technical one, in which both sides would work together to 
clarify basic issues, and a political one, in which each 
side would make a political decision on what was acceptable. 
 
4. (SBU) The Ambassador responded by noting that there was 
much to discuss in these areas.  He agreed with Tu's 
assessment of the technical and political aspects especially 
for any issue as complex and multifaceted as a WTO 
accession, which has both bilateral and multilateral 
negotiating tracks.  As a key player in both the 
multilateral and bilateral tracks, the United States had 
made a political commitment to support Vietnam's accession, 
hopefully in 2005.  In that regard, the United States had 
consistently lived up to its political commitment.  The 
United States was also pleased that there would be bilateral 
talks in Washington next week.  The Ambassador commented 
that he had asked his Economic Counselor to go to Washington 
to assist in the negotiations. 
 
5. (SBU) While the political aspect would be important, the 
technical requirements would need to be addressed as well, 
the Ambassador continued.  The United States is working hard 
to make accession in Hong Kong a reality as shown by the 
flexibility offered in December 2004 by providing the U.S. 
goods market access requests.  Having reviewed Vietnam's 
January response, the United States is disappointed that the 
revised goods offers did not come close to bridging the gap. 
Moreover, Vietnam's revised services offer only put on paper 
the understandings reached in the October round in 
Washington and did not go further to include suggested 
improvements to narrow the differences. 
 
6.  (SBU) The Ambassador went on to say that although the 
U.S. political commitment was as strong as ever, the United 
States was concerned that 2005 would be a busy year for the 
two countries as well as the WTO accession experts since 
eight countries have expressed interest in acceding to the 
WTO in Hong Kong in December.  Many members of the U.S. team 
working with Vietnam are also involved in other accession 
negotiations such as those with Russia, Saudi Arabia and 
Ukraine.  While Vietnam's accession is important, the two 
sides are behind where they thought they would be today. 
Therefore, they need to work harder.  Both sides would like 
to set the stage for a successful visit of Vietnam's Prime 
Minister.  While not impossible, it was growing more 
difficult for Vietnam to meet its goal of concluding the 
bilateral negotiations before December.  Remarking that the 
United States had given Vietnam a new paper on services on 
March 8, the Ambassador said that he hoped there could be 
real movement at the March 14-16 negotiations so that the 
two sides could move closer to concluding their bilateral 
negotiations. 
 
7. (SBU) Expressing thanks for the United States' steps to 
provide new requests on goods and services, VM Tu said that 
his team was now seriously considering the U.S. requests. 
He hoped that significant progress could be made at the next 
round in Washington.  He stressed that it would be good for 
the United States to give priority to the bilateral 
negotiations with Vietnam in order to have continuous 
bilateral negotiations in the coming period.    He expressed 
his thanks in advance for the good will gesture that the 
United States could make by giving priority to Vietnam. 
 
8.  (SBU) Tu noted that Vietnam needed to focus on both 
bilateral and multilateral negotiations.  In the 
multilateral track, he would look for U.S. flexibility 
because the BTA had been based on WTO principles and the WTO 
was only a higher level of what was in the BTA.   Already 
Vietnam had revised many legal documents to implement the 
BTA.  The National Assembly (NA) would focus on revising and 
issuing new legal documents as needed in 2005.  Tu observed 
that the NA had held a session the previous week to hear 
about revising and passing legal documents in order to meet 
the WTO requirements.  There had also been a meeting with 
the NA Foreign Affairs Committee to consider how to ensure 
that the legislative programs required for WTO were 
efficiently carried out. 
 
9. (SBU) The Ambassador commented that he and a group of 
interested Ambassadors and others had discussed this issue 
in depth the previous week, motivated by a shared interest 
in seeing Vietnam succeed and join the WTO as soon as 
possible.  The group had two main concerns. First, key laws 
under Vietnam's WTO legislative action plan would not be 
enacted until 2006, after the proposed accession date.  At 
the same time, the group of Ambassadors recognized that the 
NA has a tremendous workload.  A key question, then, is how 
the NA and government will work together to ensure all 
legislation is completed on time.  While this was not the 
main purpose of the bilateral meeting next week, the United 
States would look forward to hearing from Vietnam's 
delegation about how they plan to handle this issue.  A 
related issue is that WTO members need to review all the 
legislation to ensure that it will bring Vietnam's system 
into conformity with WTO rules prior to accession.  The GVN 
recognizes this and committed in the Ninth Working Party to 
provide documents so that the Working Party members could 
review them.  But as of March 9, the WTO secretariat still 
had not distributed any drafts of legislation passed in 
November let alone drafts of legislation proposed for 
passage in May.  All of these processes take time, therefore 
the sooner the documents are provided, the better, the 
Ambassador stressed. 
 
10. (SBU) Referring to press reports of the previous week, 
the Ambassador said he had been puzzled to hear Minister of 
Trade Truong Dinh Tuyen say that WTO accession in 2005 might 
be too hard for Vietnam.  The Ambassador asked whether this 
was accurate and whether it meant that Vietnam was wavering 
about its commitment to accede in Hong Kong.  VM Tu 
responded that the press reports had been incorrect and that 
the Ministry had requested a correction.  Vietnam is not 
wavering from its target as expressed to the United States 
and other trading partners supportive of accession.  Tu 
confirmed that the legislative action plan would be revised 
as the Ambassador had mentioned based on discussions between 
the NA and the government.  As for the distribution of legal 
documents to WTO Working Party members, some documents were 
now being translated while a number had already been sent to 
the WTO Secretariat, in particular all the documents 
relating to Sanitary and Phyto Sanitary (SPS) and Technical 
Barriers to Trade (TBT) matters.  The GVN intends to provide 
remaining documents soon, he said. 
 
11. (SBU) Noting that the United States, through USAID 
provides technical assistance to the NA on legal reform, the 
Ambassador said that the United States would like to focus 
as much as possible on WTO matters.  So far much of the work 
of the Support for Trade AcceleRation (STAR) Project had 
related to the BTA, but clearly WTO legislative compliance 
tracks well with the focus of STAR.  If the GVN had specific 
requests regarding how to direct this program, the 
Ambassador offered to try to help. VM Tu expressed his 
appreciation for the contributions by STAR and took note of 
the Ambassador's offer. 
 
12. (SBU) The Ambassador then mentioned the third element of 
Vietnam's WTO accession package, Permanent Normal Trade 
Relations (PNTR).  For Vietnam to accede in Hong Kong (with 
respect to its dealings with the United States), the U.S. 
Congress would have to vote to establish PNTR for Vietnam in 
the fall.  The Congress would certainly look at whether 
Vietnam had met its obligations under the BTA.  While the 
record was good, it was not perfect, the Ambassador 
observed. 
 
13. (SBU) In this process, the Congress would also look to 
the U.S. business community for a picture of how the 
environment for doing business is changing, the Ambassador 
continued.  While this record is also generally good, there 
are issues that have not yet been resolved.  Noting that 
most of these questions are not under the purview of the 
Ministry of Trade, the Ambassador listed several outstanding 
issues so that the Vice Minister would be aware of them.  He 
mentioned the investment disputes in a coffee project called 
Krong Ana in Daklak Province involving a U.S. firm and the 
Third Ring Road Project in Hanoi involving a U.S. firm 
called Tricore.  He also noted that U.S. firms had made 
competitive offers for several procurements that had not yet 
been awarded.  He also noted that although there had been 
movement on insurance licenses for U.S. firms, not one has 
been issued.  AIG had been in to see the Minister of Trade 
that morning, he noted.  Finally, he raised the issue of the 
special consumption tax on automobiles and its impact on the 
auto industry in Vietnam in which U.S. firms have invested. 
The Ambassador said that he had discussed these issues at 
various levels within the GVN and would continue to do so. 
 
14. (SBU) Noting that he had received it that morning, the 
Ambassador then conveyed a March 8 letter from Acting United 
States Trade Representative Peter Allgeier to Minister 
Tuyen. 
 
MARINE